- Major online stock brokerages including ETrade, TD Ameritrade and Charles Schwab recently cut trading commissions to $0.
- However, they will continue to make billions loaning out idle funds in clients’ brokerage accounts.
- Schwab and TD Ameritrade generated $10.1 billion and $5.4 billion in revenue from loaning out clients’ idle funds last year.
- Another growing source of revenue for online brokers is “payment for order flow,” or sending their clients’ buy/sell orders to computerized trading firms that monetize bid-ask (buy/sell) price differential spreads.
